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2016 (11) TMI 519 - CESTAT MUMBAI

2016 (11) TMI 519 - CESTAT MUMBAI - TMI - CENVAT credit - ‘rent-a-cab’ service - suppression of facts - Held that: - Suppression of facts with intent to evade tax/duty for invoking the extended provision to recover duty/tax cannot be straitjacketed into a particular set of circumstances. Each evaluation is dependent on the particular set of facts peculiar to the case in dispute - In essence, the claim is that the service tax authorities could not be presumed to be aware of every aspect of the fu .....

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xclusive. - The provision for extending the period of limitation was originally enacted because suppression of fact, willful misstatement et al cannot be ruled out in discharge of duty/tax liability. That, in the present context, would entail application of that provision to the utilization of CENVAT credit towards discharge of tax liability which is not in dispute here. The applicability of section 73 to rule 14 of CENVAT Credit Rules, 2004 is qualified by the expression ‘mutatis mutandis’ .....

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nds that, despite being barred by limitation, were held to have been due for discharge by default - appeal of Revenue rejected. - APPEAL NOS: ST/227 & 597/2011 - Order No. A/93114-9315/16/STB and M/93116/16/STB - Dated:- 6-10-2016 - Shri M V Ravindran, Member (Judicial) And Shri C J Mathew, Member (Technical) Shri P.K. Sahu, Advocate with Shri S.P. Sheth, Advocate for the assessee Shri K.M. Mondal, Special Counsel for Revenue Per: C J Mathew: Order-in-original no. PI/Commissioner/Service Tax/13/ .....

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is over a demand of ₹ 12,21,79,364/- being credit of service tax alleged to have been incorrectly availed and ₹ 12,98,515/- alleged to have been short paid as tax on rendering of output services. The notice dated 31st May 2010 also proposed appropriation of ₹ 1,75,93 837/- already paid towards the amount due as well as interest of ₹ 54,05,156/- remitted during the investigations. For the period from April 2009 to September 2009, notice dated 1st October 2010 demanded an .....

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adquarters facility, inability to furnish some documents relating to credit availed at Pimpri, availment of credit on ineligible input services, availment of credit before payments towards invoices were discharged, availment of credit on bought out items supplied directly to site, wrong availment of credit on cement and steel, excess availment of credit of cess, short-payment of tax in CENVAT credit account and double utilisation of tax deposited towards tax dues. The demands in the second show .....

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of the insurance policies. The amounts confirmed as recoverable owing to short-payment on output services was scaled down and confirmed for the earlier period. While thus disallowing some of the credits, it was also held that the extended period of limitation could not be invoked for the earlier period; nevertheless, the amounts confirmed, totaling ₹ 66,91,644, were held to have been paid as self-assessed as per section 73(3) of Finance Act, 1994. For the later period, the amount confirme .....

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an only speculate that it could have been the amounts that were deposited in the PLA by the assessee at various times during the period in dispute. 5. The demands for the earlier period totaled ₹ 12,21,79,364/- and the setting aside of all but the amount supra on grounds of limitation has been appealed against by Revenue. Besides, the dropping of demand in seven of the categories on merit has also been challenged as also the partial dropping in two categories. Similarly, challenge has also .....

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aside on grounds of limitation, our primary obligation is to determine the correctness of that decision before proceeding to evaluate the findings on merits. The adjudicating authority has taken notice of audits in February 2005, March 2005, in March-April 2006, September 2005, in 2006 and in January-February 2009 to conclude that assessee was subject to periodic audits/scrutiny. It was also noticed that a number of notices in connection with taxes and duties pertaining to turnkey projects had b .....

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. 7. Suppression of facts with intent to evade tax/duty for invoking the extended provision to recover duty/tax cannot be straitjacketed into a particular set of circumstances. Each evaluation is dependent on the particular set of facts peculiar to the case in dispute. In the grounds of appeal, Revenue contends that the Commissioner erred in not considering the narrow scope of audit, limited by the audit plan, and that the decisions in HCL Technologies Ltd v. Commissioner of Central Excise Noida .....

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ue also highlighted these decisions. We are not inclined to consider the decision in re HCL Technologies Ltd to be a binding precedent as it disposed off a stay application and is naught but a preliminary view. In re Chemfab Alkalis Ltd, it was held that 5. After hearing both sides and perusal of the records and the cited case law, I find that in the case of Hindustan Coca Cola (supra) the following observation has been made by the Tribunal while disposing of a stay petition :- The ld. Counsel i .....

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puts were not removed as such cannot be gone into at this stage, and has been left open to be considered at the time of the final hearing, because the demand relates to the Wada unit, which has received the inputs and not the Nashik unit, which has paid the amounts. Besides, this issue is pending determination in the Company s cases in respect of units, which were ordered to pay duty on empty glass bottles and crates before the tribunal at Bangalore and Mumbai and, therefore, we are not expressi .....

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ion or wilful misstatement more so when, 4 charts annexed to the appeal of the Company at pages 422 to 425, on which heavy reliance was placed, relating to payment of excise duty on used empty glass bottles and crates by different units of the Company located in Gujarat, Rajasthan, Goa, Madhya Pradesh etc. have not been refuted or rebutted by the Commissioner in the order. 6. It is seen from the above that the Tribunal took into account several factors while waiving the requirement of predeposit .....

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ase of Hindustan Coca Cola (supra) which appear to have persuaded the Tribunal Bench to take a particular prima facie view in the said case. The present case is different where such attendant additional factors are not present. Besides, it is well known that the department has a regular programme of audit, under which different units are audited according to the frequency laid down, for example, a bigger unit having more transactions and paying more revenue is audited more frequently, say, once .....

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o show suppression of facts or mis-declaration. If there is mis-declaration or suppression of facts, the fact that department was aware or could have become aware by analyzing the facts in declarations filed by the units, do not make the proviso inapplicable. It is for the department to show that the appellant had suppressed the facts or had indulged in mis-declaration. In this case, in the declaration, the appellant was required to declare that brand name belonged to someone else. At least when .....

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, appellant did not gave a correct reply. In our view, this would be sufficient even though it would have been proper if detailed discussions would have been recorded and conclusion arrived at. 9. The above make it clear that circumstances of cognizance do not detract from the evidence of suppression that was indulged in by an assessee with intent to evade duty or tax. We cannot but be in agreement with that proposition. However, the qualification in re Chemfab Alkalis Ltd too must be given its .....

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e contention in the grounds of appeal that audit is a limited activity may not be acceptable. From the enumeration in the impugned order, it is seen to be regular and frequent and covering the entire period of dispute. 10. The audit scheme encompasses special attention to large taxpayers and the appellant-Commissioner cannot, with marked assurance, deny that the returns had not been scrutinized as part of the audit plan. There is also no allegation that returns were deficient or that these were .....

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Finance Act, 1994 are amply clear in permitting the extension of period of limitation only in the event of fraud, collusion, willful misstatement, suppression of facts, or any other contravention with intent to evade tax. Interpretational disputes and these specifically enumerated situations are mutually exclusive. 12. Section 73 of Finance Act, 1994 is the clone of section 11A of Central Excise Act, 1944. The scheme for invoking the extended period initially considered that empowerment to be o .....

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not one of tax liability but that of disallowance of credit claimed in the CENVAT credit account. With the introduction and subsequent expansion of the credit scheme, there is an inbuilt disincentive to suppress facts for evasion of taxes/duty. Unlike levy and collection of duty/tax, the rules relating to CENVAT credit are not only comprehensive but also lay emphasis on record-keeping and maintenance. An assessee, especially a large one, will find it more convenient to account its transactions .....

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lity which is not in dispute here. The applicability of section 73 to rule 14 of CENVAT Credit Rules, 2004 is qualified by the expression mutatis mutandis besides admitting to two mutually exclusive possibilities. In the context, it is more pertinent to note that suppression of fact is not the mirror image of lack of awareness by the tax authorities for, if that were to be so, the statutory provision of section 73 of Finance Act, 1994 relating to the normal period of limitation would be redundan .....

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confirmation and recovery. 14. Having arrived at that finding, we now examine the correctness of the action of the adjudicating Commissioner in holding that the amounts of ₹ 14,38,434/- disallowed for failure to furnish documents, ₹ 5,49,280/- on account of services that do not have a nexus with the output, the short-fall in tax payment of ₹ 1,29,181/- through debit of CENVAT credit account, ₹ 39,61,434 on account of insurance premiums, and excess availment of ₹ 61 .....

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adjudicating Commissioner has done so implies that the wherewithal by which the recovery was made before it was held to be barred is not available on records. These amounts would, in other circumstances, have been disallowed and hence reversed in the CENVAT Credit account. Without a specific order of reversal, such an order of recovery is unenforceable. Except to the extent that the assessee has already reversed the said amounts, the orders relating to deemed discharge are not tenable and are se .....

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